Supply Chain Contract Based On The Repurchase Of The Second A Sale

A major challenge to manage supply chain is to maximize profit of the whole supply chain under decentralized decision-making. Members of supply chain optimize their own profit instead of the whole supply chain profit under decentralized decision making because of double marginalization. Therefore, one of the main issues of supply chain management is how to build a mechanism to coordinate the supply chain so that members of the supply chain prefer maximizing the total supply chain profit to maximizing their own profit. The mechanism should not only be able to coordinate the supply chain or improve the performance of the supply chain but also be easy to be implemented. The supply chain contract is such a mechanism.The traditional supply chain contract design research usually assumes that sale price in the whole sale period are unchanged. However, many short-life commodities' price will go down gradually with the end of product life. Another stimulus that suppliers and vendors want to gain market share will causes vendors and suppliers to reduce the price. Thus, sales of short-life commodities are often carried out in phases, which is rather complicated.Based on classical model, this paper will talk about supply chain contract design and selection from two perspectives under vendors' reducing sales prices. First, the second sales are mainly influenced by vendor. In this case, I will design whole-sale price contract, return policy, return policy plus fee sharing contract, and return policy plus rebate contract. Second, the sales are mainly influenced by market. In this case, I will design whole-sale price contract, return policy and return policy plus mark-down contract.It comes out that an appropriate supply chain contract design will contribute to increasing firms' profits and reducing their risk.